There Is A Growing Willingness By Europe To Contribute To Regional Security

By Elwin de Groot, head of macro strategy at Rabobank

Losing One’s Innocence

A degree of calm seemed to return to energy and financial markets yesterday, helped by tentative signs – reinforced by US and Israeli statements – that intensified military operations against Iranian targets are degrading Iran’s air defense, missile, and drone capabilities. A US submarine sank an Iranian naval vessel off the coast of Sri Lanka, and, as noted in yesterday’s Global Daily, Kurdish forces appear to have already made limited incursions into Iranian territory.

This is a crucial indicator of Iran’s remaining and degraded capabilities. There has been a consistent and steep daily decline in the number of launches from Iran. pic.twitter.com/GuDmjsSYAs

— Raylan Givens (@JewishWarrior13) March 3, 2026

Still, there is no clear evidence that the regime is nearing collapse. Both Israel and the United States have signalled that their operations will continue for several more weeks. Given the “fog of war,” any firm conclusions would be premature. Indeed, the closure of the Strait of Hormuz – even if it appears to be a narrow maritime problem – report that the Netherlands is also sending a naval vessel.

And, as European leaders try to find the right posture given the developments in the Gulf region, the EU is also trying to make further advancements in other parts of its strategic autonomy agenda.

First, the EU indicated it does not expect the US to raise its universal tariff on EU exports from 10% to 15% this week, despite Treasury Secretary Scott Bessent signalling the increase was imminent. According to Bloomberg, citing individuals familiar with the matter, the EU has received assurances that the US will maintain the 10% rate for the bloc. EU lawmakers have therefore kept the ratification process on hold pending further clarity from Washington and plan to reconvene on 17 March.

A central question, however, is whether the US can legally offer preferential tariff treatment to any specific country or bloc. The current framework is being applied uniformly, and existing exemptions cover only narrow categories of goods. While legal interpretation is ultimately for experts, the statutory language behind Section 122 tariffs supports temporary, non‑discriminatory surcharges – not country‑specific relief. Any deviation could expose the administration to legal challenges, and if courts adhere to the original intent of Section 122 (addressing balance‑of‑payments risks), preferential exemptions may trigger broader complications.

Given this backdrop, the EU’s optimism should be treated cautiously. US “assurances” may simply suggest that alternative tariff mechanisms are being prepared. In the same CNBC interview, Bessent said he believes tariff rates will revert to their previous levels within five months, pointing to potential replacements under Sections 301 and 232.

We warns that with numerous last‑minute changes – including dropping certain industries – the legislation risks substantial revision before final adoption. Once in force, however, it could have significant implications for the affected sectors. That the EU is losing its economic innocence does not seem a far-fetched conclusion, we would argue.